The U.S. Department of Labor announced the final rule for implementing the legal requirements regarding the Equal Opportunity Clause’s religious exemption on Monday.

It is a big win for religious organizations with federal contracts as it encourages their full and equal participation. 

Executive Order 11246, signed by President Lyndon Johnson in 1965 and enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), generally requires federal contractors to abide by nondiscrimination and affirmative action requirements. However, the executive order acknowledges that religious organizations may prefer “individuals of a particular religion” in employment to maintain their religious identity and integrity. 

That accommodation in the executive order is patterned after the text of the Civil Rights Act passed over half a century ago.

The new rule provides a clearer interpretation of the religious exemption parameters by adding definitions of key terms. It adds a rule of construction to provide the maximum legal protection of religious exercise permitted by the Constitution and law, including the Religious Freedom Restoration Act. The rule also adds several examples within the definition of “religious corporation, association, educational institution, or society” to better illustrate which organizations may qualify for the religious exemption. 

According to the rule, “religion” includes “religious belief” as well as “all aspects of religious observance and practice.”

Under the rule, a “religious corporation, association, educational institution, or society” includes corporations, associations, educational institutions, societies, schools, colleges, universities, or institutions of learning that:

  • Is organized for a religious purpose; 
  • Holds itself out to the public as carrying out a religious purpose;
  • Engages in activity consistent with, and in furtherance of, that religious purpose; and
  • Operates on a not-for-profit basis; or presents other strong evidence that its purpose is substantially religious.

The rule further states, “Whether an organization’s engagement in activity is consistent with, and in furtherance of, its religious purpose is determined by reference to the organization’s own sincere understanding of its religious tenets.”

OFCCP considered court precedent in its rulemaking process.

“In this final rule, OFCCP has sought to follow the principles articulated by these recent decisions and orders, and has interpreted older federal appellate-level case law in light of them as applicable. OFCCP has chosen a path consistent with the Supreme Court’s religion and Title VII jurisprudence as well as what OFCCP views to be the more persuasive reasoning of the federal courts of appeals in these areas of the law,” the rule’s summary reads in part.

U.S. Secretary of Labor Eugene Scalia discussed the rule.

“Religious organizations should not have to fear that acceptance of a federal contract or subcontract will require them to abandon their religious character or identity,” he said in a released statement. “This rule gives full effect to Executive Order 11246’s protection of religious organizations.”

While the incoming Biden Administration can overturn this new rule, it just clarifies an existing, long-standing rule, which will make it harder to do. The rulemaking process is also lengthy, and unreasonable changes could be subject to a court challenge and, so far, courts have mostly ruled in favor of religious liberty.

Read the final rule and its executive summary below:

RE-Final-Rule-508c

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